Amazon Wins $600 Million CIA Cloud Deal As IBM Withdraws Protest

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After spending the last eight months trying to block Amazon's 10-year, $600 million cloud computing contract with the Central Intelligence Agency, IBM has decided to give up the fight, Federal Computer Week reported Wednesday.

The battle began in January when FCW reported that the CIA had chosen Amazon Web Services over IBM to build a version of its public cloud that runs inside the CIA's data center. IBM protested the decision in February, and in June, the U.S. Government Accountability Office upheld parts of its protest and recommended the CIA re-open bidding.

Amazon then sued the government to have the deal reinstated, and earlier this month, the court ruled in its favor and green-lighted the deal.

IBM then filed a motion to stop Amazon and the CIA from beginning work. But after the government said more delays could threaten national security, IBM is now ending its fight.

"In light of the government's recent submissions emphasizing its need to move forward on the contract, IBM has withdrawn its motion. IBM maintains its position that the GAO's findings were appropriate," an IBM spokesperson said in an emailed statement.

Amazon didn't respond to a request for comment. But given that government agencies have voracious IT spending appetites, this might just be AWS' biggest customer win to date.

Craig Atkinson, CTO at JHC Technology, a Waldorf, Md.-based AWS partner, said he thinks the CIA cloud deal could open the door to other big AWS contracts. The intelligence community has strict guidelines for data security, which is why CIA choosing AWS amounts to "a major endorsement," Atkinson said in an email.

"I would not be surprised to see a large procurement from the Department Of Defense or the Defense Information Systems Agency now that CIA is essentially sanctioning IaaS and AWS," Atkinson told CRN.

Conventional wisdom suggests the AWS cloud would be cheaper because Amazon's whole game is about undercutting competitors' pricing. But, the CIA chose AWS even though IBM's cloud would've been cheaper.

While Amazon's estimated price was around $54 million higher than IBM's, the CIA said this "was offset by Amazon’s superior technical solution," the GAO said in its report. Specifically, the CIA felt AWS would scale better than IBM's cloud.

Kevin Chu, director of systems and infrastructure at Digitaria, a San Diego, Calif.-based AWS partner, actually isn't surprised that AWS won the CIA cloud deal.

From growing its enterprise sales team to ensuring that its cloud services meet regulatory compliance requirements, AWS has been working to target customers in government circles, he told CRN.

"More and more enterprises that Digitaria engages with require compliance with one or more of these regulations or standards as a term of doing business with them," Chu said in an email.

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